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TMI Blog2024 (8) TMI 1532X X X X Extracts X X X X X X X X Extracts X X X X ..... t disclosed this investment in schedule FA of ITR filed for A.Y. 2016-17 as revealed in the enquiries conducted by the investigation wing. The foreign asset schedule (FA schedule) was introduced in the return of income since A.Y. 2012-13 in the Finance Bill, 2012 in order to track the foreign assets and income generated thereon in foreign jurisdiction of Indian residents, therefore the same became mandatory reporting in "FA Schedule" since 2012-13. Further with the introduction of BMA, the disclosure of foreign assets is mandatory under the BMA and section 43 of the BMA attracts penalty of Rs.10,00,000/- for each such non disclosure of foreign assets from A.Y. 2016-17. Accordingly, the Assessee was show caused "as to why a penalty of Rs.10,00,000/- should not be levied in his case in accordance with the section 43 of the BMA for A.Y. 2016-17 for not disclosing the investment made with Equatex UK Ltd". 3. The Assessee in response to the showcase, by filing his reply dated 25.03.2023 has mainly claimed as under: That the Assessee was an employee of Vodafone M-Pesa Limited (part of the Vodafone group) and was granted stock options i.e. ESOPs by the company as a part of his employme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and ultimately imposed the penalty of Rs.10,00,000/- under section 43 of the BMA by observing and holding as under: "6. The submission of the assessee is carefully considered but not found tenable because of the following reasons- 6.1. The Black Money Act, 2015 requires that every resident of India shall disclose all the foreign assets in the Schedule FA of ITR. For the purpose of disclosure, the Act does not distinguish the foreign assets based on the source of investment or explanation for the sources. The Act is very clear with respect to disclosure of foreign assets. All the foreign assets must be disclosed. As per the title of Section 43, an asset located outside India must be disclosed. There is no mention of unexplained foreign asset or unexplained foreign income. 6.2. Thus, the penalty under section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 is on account of non-disclosure of foreign assets held by a resident at any point of time during the previous year. In the instant case, the assessee failed to disclose the foreign assets in the return of income filed prior to issuance of summons. No exceptions have been provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly) under section 43 of the Black Money (Undisclosed foreign Income and Assets) and Imposition of Tax Act, 2015 for A.Y. 2016-17. Demand Notice issued accordingly. This order is passed after prior approval of Addl. DIT(Inv.), FAIU-4, Mumbai vide order sheet noting dated 26.05.2023." 5. The Assessee, being aggrieved, challenged the levy of penalty before the Ld. Commissioner who affirmed the levy of penalty, almost on the same reasoning as given by the AO for levying the penalty. 6. The Assessee, being aggrieved, is in appeal before us. The Ld. Counsel Shri Jaiprakash Bairagra, at the outset, by drawing our attention to the income tax return Form-2A tried to demonstrate that in such Form there is no such column for disclosing the foreign assets. Further, the objective of BMA and the definition reflects that BMA applies solely for "undisclosed foreign income and assets" but does not apply to "disclosed foreign income and assets". As the Assessee has declared the foreign assets qua ESOP valued at Rs.16,89,381/- in "Schedule AL" of the income tax return as well as the employer of the Assessee has also declared the foreign asset/value of ESOP in Form no. 16 as well as Form no. 12B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Current Investments" attached with the return of income filed for the AY under consideration. Let us peruse the provisions of section 43 of the Act, which for ready reference and clarity reproduced herein below: "If any person, being a resident other than not ordinarily resident in India within the meaning of clause (6) of section 6 of the Income-tax Act, who has furnished the return of income for any previous year under sub-section (1) or sub-section (4) or sub-section (5) of section 139 of the said Act, fails to furnish any information or furnishes inaccurate particulars in such return relating to any asset (including financial interest in any entity) located outside India, held by him as a beneficial owner or otherwise, or in respect of which he was a beneficiary, or relating to any income from a source located outside India, at any time during such previous year, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum often lakh rupees: Provided that this section shall not apply in respect of an asset, being one or more bank accounts having an aggregate balance which does not exceed a value equivalent to five hundred thousand rupees at any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. 10.2 In the instant case, the Assessee admittedly duly recorded and disclosed the investment in foreign entity in its audited balance-sheet and also furnished such information under "Non Current Investments" in Schedule para-A-BS in its return of income, hence we are in concurrence with the claim of the Assessee that the Assessee has directly or indirectly complied with the statutory provisions and therefore, the case of the Assessee does not fall under the rigorous provisions of section 43 of the B.M. Act. No doubt the Schedule "FA" and BMI Act, have been introduced and enacted for checking the economic offenders, tax evaders and for analyses of information qua foreign investment/income by using artificial intelligence and Schedule "FA" applicable specifically to the Assessee(s) whose acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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